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Topic of Foreign Money in U.S. Races Hits Hustings

WASHINGTON — Ever since he raised the issue in his State of the Union speech nearly nine months ago — prompting head-shaking by Justice Samuel A. Alito Jr. of the Supreme Court — President Obama has been warning about the danger of foreign money creeping into elections as a result of the court’s landmark campaign finance ruling.

In two campaign stops Thursday, Mr. Obama invoked what he portrayed as a specific new example, citing a blog posting from a liberal advocacy group as he teed off on a longtime adversary, the U.S. Chamber of Commerce, over its political spending.

“Just this week, we learned that one of the largest groups paying for these ads regularly takes in money from foreign corporations,” Mr. Obama said. “So groups that receive foreign money are spending huge sums to influence American elections.”

But a closer examination shows that there is little evidence that what the chamber does in collecting overseas dues is improper or even unusual, according to both liberal and conservative election-law lawyers and campaign finance documents.

In fact, the controversy over the Chamber of Commerce financing may say more about the Washington spin cycle — where an Internet blog posting can be quickly picked up by like-minded groups and become political fodder for the president himself — than it does about the vagaries of campaign finance.

Organizations from both ends of the political spectrum, from liberal ones like the A.F.L.-C.I.O. and the Sierra Club to conservative groups like the National Rifle Association, have international affiliations and get money from foreign entities while at the same time pushing political causes in the United States.

In addition, more than 160 political action committees active in campaigning have been set up by corporations that are based overseas, including military contractors like B.A.E. Systems and pharmaceutical giants like GlaxoSmithKline, according to data from the Center for Responsive Politics, a nonpartisan research service.

Such groups, which collectively have spent hundreds of millions dollars on political causes to advance their agenda, are required by law to ensure that any foreign money they receive is isolated and not used to finance political activities, which would violate a longstanding federal ban. The Chamber of Commerce says it has a vigorous process for ensuring that does not happen, and no evidence has emerged to suggest that is untrue.

Richard L. Hasen, an election-law specialist at Loyola Law School in Los Angeles, said there were legitimate questions about whether foreign money could be making its way into campaigns, particularly because many groups are not required to disclose their donors. But he added, “I’ve seen no proof of the chamber funneling a penny of foreign money into U.S. elections.”

The specter of foreign money entering American campaigns has been a potent political issue over the years. President Bill Clinton’s 1996 re-election campaign gave rise to evidence of illegal contributions from overseas.

Mr. Obama himself faced accusations by conservative opponents in his 2008 campaign that his large online fund-raising efforts may have generated contributions from foreign nationals barred from contributing. No allegations were substantiated.

Photo

President Obama delivering remarks in Chicago on Oct. 7.Credit
Doug Mills/The New York Times

“People who live in glass houses shouldn’t throw stones,” said Bruce Josten, chief lobbyist for the chamber, as he recalled the 2008 allegations.

He accused Mr. Obama of using “smear tactics” in bringing up the issue at two separate campaign stops this week in order to deflect attention from his own record as the midterm elections approach. “This is a White House that seems to like to pick an enemy and use it as a foil to advance an agenda,” he said.

Mr. Josten said the Chamber of Commerce had 115 foreign member affiliates in 108 countries, who pay a total of less than $100,000 in membership dues that go into its general fund.

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The group’s total budget is more than $200 million, and Mr. Josten said the group had safeguards to segregate the small fraction generated overseas from other accounts to comply with federal law and avoid bleeding into political spending.

The group has already spent more than $25 million on an aggressive political ad campaign in attacking policies it considers anti-business and the candidates, overwhelmingly Democrats, who have supported those policies. The chamber expects to spend at least $50 million by the November elections.

“We don’t raise money from foreign corporation for our public affairs activities,” Mr. Josten said. “I am absolutely certain we are in full compliance with all federal campaign laws.”

The issue of the chamber’s funding first gained notice this week when ThinkProgress, a blog affiliated with the Center for American Progress, an influential liberal advocacy group, posted a lengthy piece with the headline “Exclusive: Foreign-Funded ‘U.S.’ Chamber of Commerce Running Partisan Attack Ads.”

The piece detailed the chamber’s overseas memberships, but it provided no evidence that the money generated overseas had been used in United States campaigns. Still, liberal groups like MoveOn.org pounced on the allegations, resulting in protests at the chamber’s offices, a demand for a federal investigation by Senator Al Franken, Democrat of Minnesota, and ultimately the remarks by Mr. Obama himself.

White House officials acknowledged Friday that they had no specific evidence to indicate that the chamber had used money from foreign entities to finance political attack ads.

“The president was not suggesting any illegality,” Bob Bauer, the White House counsel, said. Instead, he said Mr. Obama’s reference to the chamber was meant to draw attention to the inadequacies of campaign disclosure laws in allowing groups to spend large amounts of money on politics without disclosing their donors.

White House officials called on the chamber to go beyond current disclosure laws and establish that no foreign money has been used in its political campaigns. “They can put this to rest,” said Joshua Earnest, a White House spokesman. “They have the keys to the file cabinet.”

But a number of Republicans said Friday that they thought Mr. Obama’s attack was unfair.

“It’s really just unfortunate and irresponsible rhetoric from the White House,” said Benjamin L. Ginsberg, a Republican campaign finance lawyer. “These charges are just not real.”

A version of this article appears in print on October 9, 2010, on Page A14 of the New York edition with the headline: Topic of Foreign Money in U.S. Races Hits Hustings. Order Reprints|Today's Paper|Subscribe